Among the initiatives: a shift from institutional to community-based care, a major overhaul of state health services, and a redistribution of current funding.

Gov. Chris Christie's 2013 budget proposal calls for sweeping changes in the organization of state health services, shifting millions of dollars into community, rather than institutional, care, and adding new funding to mental health and developmental disability services.

But despite these changes, the budget proposal represents more of a shift in dollars rather than any new investments.

Democrats, although they said they would wait for more specifics, were generally in favor of many of the health proposals, as were advocates of healthcare services. The administration called the changes a focus on the individual, rather than the department, when it comes to providing services to the vulnerable.

Christie proposes reorganizing three health and social service departments, the Department of Health and Senior Services, the Department of Human Services, and the Department of Children and Families. The new budget calls for moving all services for the elderly under DHS, and creating a Division of Aging Services. Children and youth programs now under DHS would move under the Department of Children and Families through the creation of the Division of Child Integrated Care Services. The monies devoted to these programs would move with them, reducing the Health Department's budget by $944 million and increasing Human Services and Children and Families a total of $844 million.

A major new initiative in the proposed budget is to devote more funds to community-based care for the developmentally disabled and mentally ill. This is part of an effort to provide better services for clients at a cost less than that of institutional care.

New funding of $24.7 million is targeted at developing additional community placements and services for the developmentally disabled, so that they can receive necessary residential and daily services. Another $14.3 million is being allocated to pay for community placements that occurred in 2012, as well as other community residential settings.

Christie proposes devoting the savings that accrue from the closing of Hagedorn Psychiatric Hospital, initially pegged at $9 million a year, to community housing for the mentally ill. The administration says it will also provide an additional $5 million for that purpose.

State Sen. Joseph F. Vitale (D-Middlesex), who chairs the Senate health committee, said at first blush, he supports the proposals. "I think it sounds like the right thing to do," adding, "It's all in the details, and making sure this will actually provide better services."

Vitale said the money that Christie plans to spend on community-based initiatives, "are not all that the community needs, but it's certainly a step in the right direction, given our limited resources. This is a budget proposal, and we'll see if we can improve upon it.

The Hagedorn Psychiatric Hospital is set to close in June, and Christie said that the event "marks a new day in delivering services for those with mental illness, one that focuses on providing community-based care and housing."

Christie proposes turning Hagedorn into a new site for the state's Veterans Haven program for homeless veterans, where after being evaluated at a VA hospital, veterans join a long-term program focused on social and vocational rehabilitation. The state will provide $2.3 million in startup funds to create Veterans Haven North, with the federal government providing operational funding.

State Sen. Richard Codey (D-Essex) said he remains opposed to closing Hagedorn, located in Glen Gardner in Hunterdon County, arguing that there are not sufficient, high-quality community-based facilities in which to house the mentally ill.

"There are a certain number of people that need a state institution -- not everyone is suitable for community placement. More importantly, a lot of those community services are not suitable for those patients."

Dr. Debra L. Wentz, chief executive of the New Jersey Association of Mental Health and Addiction Agencies, was appreciative that Christie's budget does not propose cuts to community-based behavioral healthcare agencies. She added that any savings the state realizes by reducing its use of institutional services "must be invested into the community behavioral health system in order to increase its capacity."

Christie's plan to consolidate services to seniors in a new Division of Aging was called "welcome news" by Ev Liebman, AARP Associate State Director for Advocacy. She said the proposed reorganization, "will eliminate the currently fractured Medicaid program and hopefully create a more effective organization to give people what they want: more home- and community-based options. People want affordable services that will allow them to thrive in their homes and communities."

Christine Stearns, vice president, health and legal affairs for the New Jersey Business & Industry Association, said "the governor's plan makes good sense. It puts all senior services under one roof, so they are easy to access and the focus is on keeping seniors in their homes, exactly where most seniors want to stay."

Sen. Loretta Weinberg (D-Bergen), former chair of the health department, said she wants to take a close look at Christie's proposed departmental reorganization, to ensure that moving senior services into DHS doesn't make the department, "too big and too unmanageable. There are a lot of questions here, and I've only seen a rough outline. I plan to meet with the commissioners and talk to them about this and how it operates. These are the departments that take care of the most fragile among us."

In a statement, DHS said "The plan presents a wonderful opportunity to enhance and realign this department's mission. In addition to improving effectiveness and outcomes, the integration of services will improve efficiency by eliminating duplication. The reconfiguration will occur thoughtfully and ensure that the approved services currently being provided to children and adolescents will continue seamlessly."

Health and Senior Services Commissioner Mary E. O'Dowd said "Over the last several years, the Christie administration has made great strides in rebalancing long-term care and investing more in home- and community-based services, and this step to realign our operations will help us further achieve our goals."

State funding to New Jersey hospitals is unchanged from the current year, at $986.3 million. Betsy Ryan, president of the New Jersey Hospital Association, said "Once again, Gov. Christie has recognized healthcare's vital contributions to our state by making hospital and healthcare funding a priority in his 2013 budget proposal. We applaud the governor for putting patients first and dedicating much-needed funding for quality and accessible healthcare for all."

Suzanne Ianni, president of the New Jersey Hospital Alliance, the association for the state's urban "safety net" hospitals, also commended the Christie administration for maintaining funding for hospitals, and for streamlining all hospital-related issues under what will be renamed the state Department of Health.